Macomb County median home prices spike by 43.8 percent

September’s home sale prices continued their upward climb, with median prices increasing 43.8 percent over last year largely because of low inventory levels and an influx of buyers seeking to purchase a home.

But those same inventory levels have significantly limited the number of homes that are changing hands in Macomb County, and the rest of southeast Michigan.

According to a report released by Farmington Hills-based Realcomp, which tracks home sales in Michigan, median sales prices increased from $80,000 in September 2012 to $115,000 last month. Sales of homes, however, inched up by 6.7 percent during the same period, with 1,033 homes sold this year versus 968 in 2012.

Karen Kage, president of Realcomp, said inventory levels have reached a critical level that will continue to drive median prices up. But she added the slowdown in sales is not because of a lack of interest, but due to a lack of availability.

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“There are many people that want to get into the market right now, but the fact of the matter is that you can’t sell what’s not there,” she said. “One thing that people don’t see is that more properties are coming in for sale, but they’re selling so quickly that inventory levels aren’t really coming up.”

Kage said home prices, which took a dive during the recession, have worked their way back up to 2007 levels, which is good news for sellers hoping to break even or set aside a small profit after the sale of a home.

The number of listings in the county has decreased by 13.4 percent from 3,347 in September 2012 to 2,897 last month.

Macomb’s median sales price increases outpaced the increase in Oakland County, where prices crept up 23 percent in September. In Wayne County, median prices escalated by 50.8 percent during the same period.

Interest rates may increase

One of the factors driving the sales is low interest rates. But those rates may go up in the near future, said David Hall, the president of Shore Mortgage.

“We’ve seen interest rates go down to the lowest levels seen in years – in the high-4’s to the mid-4’s for a 30-year, fixed mortgage – and there’s not that much lower that they can go,” said Hall. “It’s hard to predict what’s going to happen in January; rates are changing day to day.

“I do think there are some factors that will cause rates to go up,” Hall added.

Those factors include economic conditions that are generally improving, and builder’s indexes, which measure builder confidence in the housing market, that are overblown or overly optimistic, said Hall.

Shutdown blues

One development that appears to have had a minimal effect on the county’s real estate market is the government shutdown, which was resolved Wednesday after a 16-day standoff between Congressional Republicans and President Barack Obama.

Buyers that were most effected were those who in the process of obtaining Federal Housing Administration loans or Rural Housing Loans. FHA loans were slowed, but not completely cut off, by the shutdown; this was especially true if a buyer’s income needed to be verified by the IRS, which was partially closed for the duration of the shutdown.

Because Rural Housing loans are backed by the U.S. Department of Agriculture, which was shuttered during the shutdown, those loans stopped in their tracks. But overall, most sales were unaffected by the shutdown, said Jeanette Schneider, the vice president of ReMax of Southeastern Michigan.

“Many of the big lenders worked with customers to get around the shutdown,” she said. “But there were some sales that were affected by the shutdown.”

David Tuscany, a Realtor for ReMax Suburban in Sterling Heights, said his office only saw a handful of sales stuck in limbo.

“Of about 125 sales, I think four of them didn’t close,” he said. “So we didn’t see huge numbers of sales that were affected.”

Tuscany said there is the possibility that buyers stalled because of the shutdown could have had someone with a conventional mortgage come in after them and buy a house out from under them. He added that in most cases, sellers understood the predicament at hand.

Still, Hall of Shore Mortgage said he’s glad the shutdown is over.

“The longer it went on, the more problems it was going to cause,” he said. “It created an environment of uncertainty, and the market doesn’t like uncertainty. It threatened to damage all of the progress we’ve seen in the market.”